Quick Summary
- Solvent with under £25,000 left? Voluntary strike off (form DS01) is usually the cheapest route, and the final distribution can be taxed as a capital gain.
- Solvent with more than £25,000 left? A Members' Voluntary Liquidation (MVL) usually lets you pay Capital Gains Tax instead of dividend tax.
- Business Asset Disposal Relief can give an 18% CGT rate on qualifying gains from 6 April 2026 (14% in 2025/26).
- Can't pay your debts? You need a licensed insolvency practitioner — strike off is not available.
- Close the bank account and settle tax before dissolution — money left in a dissolved company goes to the Crown.
Whether you are retiring, moving into employment, or simply no longer need your company, closing it properly matters. The route you choose affects how much tax you pay on the money left in the company and how much the closure costs. This guide compares the options for 2026/27.
Option 1: Voluntary strike off (dissolution)
The simplest and cheapest way to close a solvent company is to apply to Companies House to have it struck off the register using form DS01. Before you apply, the company must not have:
- Traded or sold stock in the last 3 months
- Changed its name in the last 3 months
- Been threatened with liquidation or have any agreements with creditors
You must send a copy of the application to shareholders, creditors, employees, HMRC and any pension trustees within 7 days. Companies House publishes a notice in The Gazette, and if nobody objects the company is dissolved after about two months.
Tax on the money you take out
Distributions made in anticipation of a strike off are treated as capital (subject to Capital Gains Tax) if the total is £25,000 or less. Above £25,000, the whole amount is taxed as a dividend. That makes strike off very tax-efficient for smaller balances but expensive for larger ones.
Option 2: Members' Voluntary Liquidation (MVL)
An MVL is a formal liquidation of a solvent company, run by a licensed insolvency practitioner. The directors swear a declaration of solvency confirming the company can pay its debts in full within 12 months. The liquidator sells assets, pays creditors and distributes the rest to shareholders.
The key benefit is that distributions in an MVL are capital, whatever the amount. If you qualify for Business Asset Disposal Relief (broadly, you held at least 5% of the shares and were an officer or employee for 2 years), gains are taxed at:
| Distribution date | BADR rate |
|---|---|
| 6 April 2025 to 5 April 2026 | 14% |
| From 6 April 2026 | 18% |
The relief has a £1 million lifetime limit. Without it, gains are taxed at the normal CGT rates of 18% or 24%. Compare that with dividend tax, where higher-rate taxpayers pay over 35% from April 2026 — on a large balance, the saving usually far outweighs the liquidator's fee.
Option 3: Insolvent liquidation (CVL)
If the company cannot pay its debts, directors must act in the creditors' interests and should speak to a licensed insolvency practitioner about a Creditors' Voluntary Liquidation. Applying to strike off an insolvent company to avoid creditors is not allowed and can lead to director disqualification.
Watch out for the anti-avoidance rules
A targeted anti-avoidance rule can tax a capital distribution as income if you carry on a similar trade or activity within two years of the distribution — for example closing one consultancy company and starting another doing the same work. Plan any future work before you close.
Step-by-step checklist
- Agree with shareholders that the company will close and choose the route.
- Collect money owed to the company and pay all suppliers and loans.
- Run a final payroll and close the PAYE scheme; deregister from VAT.
- Prepare final accounts and a final Corporation Tax return, and pay the tax.
- Distribute the remaining funds to shareholders and close the business bank account.
- Apply to strike off (DS01) or appoint the liquidator.
Anything still owned by a company when it is dissolved — including money in its bank account — passes to the Crown, so finish step 5 before dissolution.
Which option is cheapest?
For most small Glasgow companies with modest balances, strike off is the cheapest: a small Companies House fee plus final accounts. Once retained funds go meaningfully above £25,000, the tax saving from an MVL normally outweighs the higher cost. We can model both for your figures and work alongside an insolvency practitioner if an MVL makes sense. See our company dissolution service.
Frequently Asked Questions
What is the cheapest way to close a limited company?
For a solvent company that has stopped trading, voluntary strike off using form DS01 is usually cheapest. You pay a small Companies House fee plus the cost of final accounts and tax returns.
How can I pay the least tax when closing my company?
If you have £25,000 or less to take out, a strike off distribution can be taxed as a capital gain. For larger amounts, a Members' Voluntary Liquidation usually allows capital treatment, potentially at 18% with Business Asset Disposal Relief from 6 April 2026.
How long does it take to close a limited company?
A voluntary strike off normally takes around two to three months after the DS01 is filed, once the Gazette notice period passes. An MVL typically takes several months to a year, depending on the company's affairs.
Can I strike off a company that owes money?
No. A company with debts it cannot pay must not use voluntary strike off to avoid creditors. Speak to a licensed insolvency practitioner about a Creditors' Voluntary Liquidation.
What happens to money left in a dissolved company's bank account?
It becomes property of the Crown (bona vacantia). Always distribute funds and close the bank account before the company is dissolved.
Closing Your Company?
We prepare final accounts and tax returns, compare strike off with an MVL for your figures, and handle the Companies House paperwork.
Sardar Muhammad, AAT
Sardar is the founder of LimeTree Accounting Solutions, an AAT-accredited practice in Govanhill, Glasgow. He works with sole traders, tradespeople, landlords and small limited companies across Glasgow and Clydebank.
This guide is general information based on UK and Scottish tax rules as at 13 October 2026. It is not personal advice. Rates and thresholds change, so speak to us about your own situation.